By means of introduction, the Chicago Bridge & Iron Company (CBI) is an
energy infrastructure firm and a major provider of government services. We'd
give you three guesses as to where and how the company began, but we don't
believe you'd need that many: Chicago Bridge & Iron was founded in 1889
in Chicago, Illinois being initially involved in bridge design and construction.
Since that time Chicago Bridge & Iron has expanded into one of the world's
largest engineering, procurement and construction companies focusing on
the global energy industry - today employing about 55,000 people.

Presently Chicago Bridge & Iron works in four segments: Technology, Fabrication
Services, Engineering, Construction and Maintenance, and Government Solutions.
While the majority of revenues are derived from the Engineering, Construction
and Maintenance segment (61% of last year's revenues) the Fabrication Services
piece (23% of revenues) can generate nearly the same operating income. Moreover,
the Technology division (just 5% of last year's revenues) actually provides
the highest margins and consequentially 20% of operating income. In other words,
Chicago Bridge & Iron is diversified in both its service offerings and
relative margins.

Now the given demand for any company's offerings can vary widely - and is
often the subject of much deeper analysis. With Chicago Bridge & Iron that
idea holds, but the company does provide a bit of a short-cut. On April 23rd
of 2014 Chicago Bridge & Iron reported a backlog of $30.7 billion - stemming
from new awards of $5.8 billion during the first quarter of 2014. Given that
the company had revenue of $11 billion in 2013, we believe it's fair to suggest
that the company has some pre-assigned work to keep itself busy and profitable.
Moreover, this backlog ranges in both size and geography varying from a mechanical
and piping construction LNG facility for Chevron (CVX) to grassroots
refinery units in China.

Specific performance information will be displayed later in this article,
but we felt that the company's dividend policy was noteworthy enough to warrant
a mention here. Chicago Bridge & Iron has increased its dividend substantially
since the turn of the century - growing its payout by a 14% annual growth rate
over the last decade. That's the good news. Here's the bad: on 5 separate occasions
during that time the dividend payout was frozen (including a suspension) and
today the company is paying out just 6% of its expected profits. So for the
current income investor this security certainly wouldn't be seen as ideal.

However, it should be underscored that management has shown an awareness
of this ideology. Specifically, CEO Philip Asherman had
this to say on the subject:

"We're going to look for more opportunities to return [value] to the shareholders
if we have an opportunity as we go through this year in terms of repurchasing
[shares] or dividends... Deliver value to shareholders between our flexibility
through share repurchases and certainly our quarterly cash dividends, which
I know the yield is a little out of whack, so we're going to try to fix that."

"Out of whack" might even be a bit understated as the current yield sits
at just 0.35%. However, it might be comforting to know that the dividend
could grow much faster than earnings per share for awhile if the company
began running out of opportunities. That is, the low payout ratio - while
a stumbling block for current income investors - could be an opportunity
for the long-term business partner.

Perhaps unsurprisingly - given the low dividend payout association - another
interesting note is the idea that Warren Buffett's Berkshire Hathaway (BRK.A)
announced a roughly 6% stake in this company about this time last year (May
of 2013).

Granted this half a billion dollar stake was likely the result of smaller
portfolio managers Ted Weschler or Todd Combs doing - but it remains that Berkshire
is a major shareholder in this company. Moreover, according to Berkshire's February
2014 13-F, Berkshire Hathaway now owns 9.5 million shares or three-fourths
of a billion dollars' worth - roughly 8.9% of the Chicago Bridge & Iron
Company's outstanding shares. If Buffett hopped on board it wouldn't be unimaginable
that Chicago Bridge & Iron could become a Berkshire Hathaway subsidiary
- Berkshire certainly
has the cash. But of course that would be pure speculation - all we can
say with any likelihood is that a "Todd" or "Ted" is probably fond of the company.

Looking a bit more objectively at the company, Value
Line analyst Sigourney Romaine had this to say about Chicago Bridge & Iron:

"Chicago Bridge & Iron is one of the most oil-and gas-dedicated engineering
and construction firms, and will probably continue to benefit for years from
rapid development of those resources, both in the United States and worldwide.
The company should also realize the last of the planned synergies from the
Shaw purchase next year. Moreover, interest costs ought to decline as the
company pays down debt."

With the above points made, we felt that it would interesting to view the
Chicago Bridge & Iron Company through the lens
of F.A.S.T. Graphs™.

Below we can see that Chicago Bridge & Iron has been somewhat cyclical,
but overall a very strong grower. Noticeably, the company has two negative
years of earnings. However, despite these setbacks, Chicago Bridge & Iron
has still been able to grow by about 16% a year since the turn of the century.
Additionally, it is clear to see that the dividend (pink line) is very well
covered by earnings (green area). Finally, we can easily see the causal relationship
between price (black line) and earnings (orange line) - that is, good, bad
or ugly, where earnings go price eventually follows. Luckily for Chicago Bridge & Iron
shareholders this relationship has been largely positive over any long-term
time frame.

With regard to performance, it should be expected - given the above described
relationship between price and earnings - that shareholders were rewarded right
alongside with the business. In viewing the performance results table we can
see that this was precisely the case - a hypothetical $10,000 at the end of
2000 would now be worth about $172,000. This represents a 24% annual growth
rate as compared to just 4% yearly growth provided by the S&P 500. Moreover,
despite the company's low dividend yield and payout ratio, the Chicago Bridge & Iron
investment would have also provided more dividend income than the S&P 500
index.

But of course, as the saying goes, past performance does not necessarily
represent the future. Thus it is important to keep an eye on the history of
a company while simultaneously focusing on the upcoming prospects. So far we
have found Chicago Bridge & Iron to be a strong company with a bit of cyclicality
and a low current payout ratio. For a view of what the future might hold, the
below Estimated Earnings and Return Calculator can provide some insight.

It's important to underscore the idea that this is simply a calculator, but
it does give a general idea of how analysts are presently viewing this company.
Most to this point, analysts are expecting earnings per share of about $5.10
and $5.90 for the next two fiscal years; which, incidentally, is quite close
to what is being displayed by outside
sources. If the earnings estimates materialize as forecast, and Chicago
Bridge & Iron is trading at an 18.2 multiple in the future, this would
represent an 11.9% annual compound gain including dividends.

Of course, one can change these estimates based upon their own conclusions
or scenario analysis. For instance, perhaps you thought the current growth
rate was a bit lofty but expected a higher dividend payout ratio in the future.
To illustrate this, you might select a 9% growth rate and perhaps a 20% payout
ratio starting in 2016.

Here we can see the estimated return drops to 8.8% per year - perhaps more
conservative. But the takeaway is that the calculator is meant to provide a
baseline for how analysts are presently viewing the company while simultaneously
allowing the user to input their own expectations.

Overall we found Chicago Bridge & Iron to be a well-built company with
reasonable prospects moving forward - including a substantial backlog. However,
the company's dividend history has been spotty and this company certainly wouldn't
be appropriate for an investor focused on income today. Management has shown
awareness and perhaps even an eventual willingness to focus on higher dividends
- but this is in no way guaranteed. Further, today's valuation is roughly in
line with how the company has been historically valued. Yet, as always, we
recommend that the reader conduct his or her own thorough due diligence.

F.A.S.T. Graphs™ is a powerful research tool providing "essential
fundamentals at a glance" on over 17,000 symbols. F.A.S.T. Graphs™ empowers
the user to research stocks deeper and faster by allowing them to exploit the
undeniable relationship and functional correlation between long-term earnings
growth and market price. Warren Buffett, the greatest capital allocator of
all time, said; "there are only two things that investor needs to know;
how to value a company and how to think about stock prices." With the
F.A.S.T. Graphs™ at their disposal, users are able to perform both of
these critical tasks... FAST.

F.A.S.T. is an acronym for Fundamentals Analyzer Software Tool that takes
all the hours of manual graphing of business fundamentals and reduces it to
seconds, giving you critical information in an instant. With one glance you
know a lot about the business you are graphing and its past, present and future
value. F.A.S.T. Graphs™ should be the first step in every research project.
Each graph is worth 1,000 words in describing a company's growth, consistency
and valuation.

Disclaimer: The opinions in this document are for informational and
educational purposes only and should not be construed as a recommendation to
buy or sell the stocks mentioned or to solicit transactions or clients. Past
performance of the companies discussed may not continue and the companies may
not achieve the earnings growth as predicted. The information in this document
is believed to be accurate, but under no circumstances should a person act
upon the information contained within. We do not recommend that anyone act
upon any investment information without first consulting an investment advisor
as to the suitability of such investments for his specific situation.